How Giving to Charity Will Help You Get Rich Quick

On Monday, I met Jim Whitton, a director of The Hunger Project, in a midtown cafe. The Hunger Project (THP) is a well-run non-profit which works efficiently and tirelessly towards sustainable poverty reduction in the developing world. With Whitton was Roger Hamilton, the chairman of something called the XL Group, which has just announced that it will give $5 million over five years to THP's programmes in India. The formal commitment is being made today, at the Clinton Global Initiative.

The deal is a winning one for all concerned. The Clinton Global Initiative has done what it was set up to do, which is catalyze commitments to improving the planet. The Hunger Project receives a large donation. And Roger Hamilton gets to be mentioned in the same breath as Bill Clinton, helping to give his XL Group kudos and respectability.

Hamilton loves to talk about creating his network of "social entrepeneurs," who give at least 10% of their profits to charity, and who will be a powerful force in terms of global poverty alleviation. In fact, Hamilton just loves to talk. He talks with great conviction and at great length, and he has turned his ability to talk into what I'm sure is a very lucrative business. For $3,300 you can hear him talk at his Entrepreneur Business School ("a journey of self and entrepreneurial discovery"), while for a mere $105 you can buy his 6-CD set called Wealth Dynamics ("a revolutionary technology that will guide you on your path to wealth"). Meanwhile, his magazine is a peculiar mix of inspirational stories with advertisements for "franchising opportunities" and the like.

Of course, there's no shortage of get-rich-quick merchants, and I find it interesting that Hamilton has hit upon giving money to charity as the way in which he distinguishes himself from the rest of the pack. Every time you sign up for one of his products, you feel good about it, because you know that he's giving some of the proceeds to charity and in fact that you and your fellow XL entrepeneurs are all pulling together in the service of a greater cause – while making lots of money, of course. The strategy seems to be working, too, at least for XL Group if not for its members.

This, then, is one reason why I still feel a little uncomfortable about the idea of for-profit philanthropy. In theory, and when it's practiced by the likes of Pierre Omidyar or Google.org or Richard Branson, it's a great idea and can work very well. But it can also create major conflicts of interest, as we saw with Banco Compartamos. And I fear that if the idea really starts to catch on then it risks being hijacked by the likes of Roger Hamilton, and people will view it with even more suspicion than they do already.